Amazon Disputes It’s Running Out of Workers

Amazon fulfillment center feature

A leaked Amazon memo from mid-2021 indicates the company feared running out of fulfillment workers by 2024, impacting its business growth prospects and vaunted level of service especially for Prime customers, according to a report in Recode that Amazon has downplayed.

But the labor shortfall is a real issue faced by ecommerce and retail fulfillment operations of all sizes, especially someone on the scale of Amazon. On the other side of the coin, Amazon leaders are seeing its high attrition rate as a natural solution to its current overstaffing levels, which were noted in its Q1 earnings call.

The memo noted the problem was especially acute in Phoenix, with the labor supply expected to be exhausted by the end of 2021, and in California’s Inland Empire – a massive and growing fulfillment region for the West coast – where it was projected to run out by the end of this year.

Exacerbating the problem is the high churn rate of Amazon fulfillment center workers. Recode said the internal Amazon menu pegged the company’s attrition rate at 123% in 2019 and 159% in 2020, compared to national averages of 46% and 59%, respectively, based on Bureau of Labor Statistics estimates. It was even worse in Phoenix, jumping from 129% in 2019 to 205% in 2020.

An Amazon spokesperson said the Recode report was taken out of context.

“There are many draft documents written on many subjects across the company that are used to test assumptions and look at different possible scenarios, but aren’t then escalated or used to make decisions. This was one of them,” Amazon spokesperson Rena Lunak told Sourcing Journal. “It doesn’t represent the actual situation, and we are continuing to hire well in Phoenix, the Inland Empire and across the country.”

The issue of workforce management and staffing in ecommerce fulfillment, and finding creative ways to address it, will be the subject of a Multichannel Merchant webinar, “How Flexible Labor is Reshaping Ecommerce Fulfillment Operations.” It will be held on Thursday, June 23 at 3p EDT, joined by experts from Instawork. You can register for the free webinar here.